Monthly Benefits are optional with almost all Long Term Care Insurance policies.  The additional cost is generally about 3-5% more depending on carrier.  Some plans require you to have Monthly benefits and do not offer a daily benefit option.

June 2012 CalendarWhat's the difference?

  1. Monthly policies accrue all expenses incurred over a month's time and add them up.  You can purchase monthly plans from $1,500/mo to $12,000/mo.  
  2. Daily policies consider each individual day.  If you have a $100/day benefit and one day incur $200 in costs, only the first $100 is reimbursed.
  3. Daily benefits assume a 365-day calendar year.  So a daily plan with $100/day will pay up to $36,500 in any given year if fully utilized.

Net result: monthly benefit plans can be more flexible - but with a slightly lower total pool of money in most cases.

Are Monthly Benefits Worth It?

Given that there is almost always an extra cost for Monthly benefits, should you add this to your Long Term Care policy?  We generally quote initially with this feature disabled where available to help reveal the lowest total cost of coverage.  Like many types of insurance, Long Term Care has its core features and then peripheral features like this.  Whether you should buy it is a matter of balancing cost and personal preference.  For many, a daily benefit is perfectly fine, and albeit at a lower cost.  For others, having monthly benefits could yield better results.  

An example where Monthly would be superior

If you had a $4,000/mo benefit (as opposed to a $130/day benefit) and ended up needing services just 4 days a week, at a cost of $200/day, you'd spend a total of $3,400 in an "average" month.  Monthly benefits would fully reimburse this amount, where daily benefits would only reimburse $2,210 of the cost.  This is considering all other things equal.  

Here's why:

4 days a week = 17 days of service @ $200/day.

Daily benefits will only cover $130/day, meaning the $70 deficit comes out of your pocket on those days.  A plan with Monthly benefits doesn't care how much is spent on any given day; it only cares about the total at the end of the month.